Raising asset values, which Gazprom last did in 2001, allows companies to declare higher depreciation expenses
Russian natural gas monopolist Gazprom raised the value of its fixed assets for the first time in more than three years to justify raising prices domestically by showing higher costs, Renaissance Capital said Wednesday.
It raised the value of its fixed assets by 72 percent at the end of March, increasing the value of total assets to 3.52 trillion rubles ($127 billion), the brokerage said in a note to clients, citing Gazprom's first-quarter financial results under Russian accounting standards.
"Gazprom has pushed through the revaluation with a view toward boosting its costs and therefore justifying higher domestic gas tariffs, as well as higher transportation fees levied on third parties," Renaissance said.
Gazprom relies on exports for about 80 percent of revenue because the government caps prices to subsidize industry and households, forcing the company to lose money on domestic operations.
Raising asset values, which Gazprom last did in 2001, allows companies to declare higher depreciation expenses and thus higher operating costs.
